Tuesday, March 23, 2010

A bit of catch up blogging. Talk about your admission against interest - not that it was anything we didn't know already.

In one sense, this is a bipartisan message. Certainly our cast of Republicans in Congress spent our money like drunken sailors when they controlled the purse strings, and its why their base let them hang in 2006. But they aren't even in the same league as Democrats, who make any analogy to drunken sailors grossly inaccurate in as much as it does not begin to capture their capacity for profligacy.

It is also a full and complete explanation of how Obama and the left could pass Obamacare in the face of a massive fiscal crisis and a national debt that threatens the stability of our nation. They simply choose to ignore it and keep rooting at the trough.

This also means that there is a fundamental and systemic failure in our body politic that, if not fixed, bodes an ill wind indeed for the future of our country.

2 comments:

Balanced budget acts along are inadequate to solve the problem. The nature of the problem is tied to a simple concept: GAAP.

All publicly traded businesses are expected to function using GAAP.

If you wish to obtain credit or other external support, you generally must operate your business using GAAP.

Not using GAAP is generally a criminal practice. It's what Enron was doing.

NOW --- The various governments -- Federal, State, and Local are NOT generally required to use GAAP. They have, for some bizarre reason, a "pass" on this concept, and it lies at the very heart of everything that is fiscally wrong with the government.

I believe that, short of a Constitutional Amendment that requires all government at all levels to operate using GAAP, that there will be no possible "fix" of the fiscal mess that the various governments have gotten themselves -- and us into.

An obvious case in point is New York State -- they HAVE a balanced budget amendment.

They had a shortfall one year.

In order to "balance" things, they did the following:

There is a separate state bonding agency whose job it is to sell state-level bonds to finance various projects.

The New York legislature, in order to deal with their shortfall, turned around and SOLD Attica prison to the bonding agency for 'x' million dollars.

Does that mean that the state stopped using Attica prison?

Au contrare, my silly, silly friend. They leased Attica prison BACK from the bonding agency for continued use.

This is a "balanced budget" in the same sense as YOU not buying that new power tool on the credit card, but asking your wife to do it instead: "Hey, *I* didn't spend the money!!"

This same sort of ridiculous logic (and it is logic -- it's just GIGO) is that which let Clinton claim to have produced a surplus for several years while we still spent more than we took in in revenue -- they just used revenue that the nation still had to pay out, just "not right now" -- in the form of social security taxes.

Q.E.D. -- no budgetary constraints will serve any useful purpose without restrictions on gimmicks that can be pulled by the ones making up the budget.

We need GAAP.

No business could get away with this, and not have its officers thrown in jail.